Attorney General Lockyer Issues Report That Shows Commercial Fund-Raisers Keep More than Charities

Average Charity Receives Less Than 40 Percent of Contributions

Monday, May 19, 2003

Contact: (415) 703-5837, agpressoffice@doj.ca.gov

(SACRAMENTO) – Attorney General Bill Lockyer today issued a report that shows the average charitable donation campaign run by commercial fund-raisers in 2001 yielded less than 40 percent of contributions to the charity.

The average commercial fund-raising campaign to solicit used-car donations also provided less than 40 percent to the charity in 2001, according to a supplemental report released by Lockyer. The supplemental report for 2001 additionally shows that for-profit thrift stores selling donated goods for charities provided an average of less than 21 percent of their total revenue to charitable organizations.

"These reports indicate many California charities earn a poor return on their investment in commercial fund-raising operations," said Lockyer. "Historically, most charities have received less than half of the money raised by commercial fund-raisers, and that trend continues. Hopefully, these reports will help donors and charities make more informed decisions about how they solicit contributions."

Commercial fund-raisers contract with charities to solicit donations. Charities pay them a flat fee or percentage of the proceeds, which covers fund-raisers' expenses and profits. After subtracting fund-raisers' payments, charities keep the balance of contributions. Most of the 85,000 charities registered with the Attorney General's Office solicit donations directly, and do not use commercial fund-raisers.

The "Attorney General's Summary of Results of Charitable Solicitation by Commercial Fund-Raisers" for 2001 shows 420 campaigns raised a total of $281.9 million. Of that amount, $141 million went to charities. The average 2001 campaign provided just 38.03 percent of contributions to the charity. That figure was up slightly from 34 percent in 2000, but below levels reached in 1997-99, when the average topped 40 percent. To avoid skewing by a few campaigns, the average percent to charity was calculated by taking the percentage of contributions returned to the charity for each campaign, adding the individual percentages together, then dividing that figure by the number of campaigns.

Of the 420 campaigns in 2001, 110 yielded 15 percent or less to the charity, 66 between 16 percent and 20 percent, and 50 between 21 percent and 30 percent. Only 123 campaigns provided more than half of the revenues to charities, while 71 netted charities between 31 percent and 50 percent.

By comparison, of 506 campaigns in 2000, 113 netted 15 percent or less to charities, 71 between 16 percent and 20 percent, 65 between 21 percent and 30 percent, 76 between 31 percent and 50 percent, and 181 more than 50 percent.

The "Supplemental Report: Donations of Personal Property" for 2001 shows that donation of old vehicles has become more popular among charities as a fund-raising mechanism. Vehicle donations solicited by commercial fund-raisers produced $43.5 million in 2001, an increase of $12.8 million from the 2000 total of $30.7 million. The average used-vehicle solicitation campaign provided 36.8 percent of the revenue to the charity, compared to 34.7 percent in 2000.

For-profit thrift stores that purchased donated goods from charities reported total revenue of $54.7 million in 2001, the supplemental report shows, with the average store providing charities 18.4 percent of its revenue. In 2000, the total revenue reported by such stores was $40 million, and the average share given to charities was 15.7 percent.

The supplemental report for 2001 also shows that for-profit thrift stores paid a fee by charities reported total revenue of more than $7.5 million, with the average store paying charities 20.1 percent of its revenue. Both of those numbers represented significant increases compared to 2000, when the total revenue for such stores was $3.9 million, and the average paid to charities was 12.4 percent.

Lockyer noted the commercial fund-raising summary uses information from unedited reports filed by charities and fund-raisers. Those reports contain more detailed information about the filers, and can be viewed at the Attorney General's web site, http://www.ag.ca.gov/charities/. The site also has a model contract that highlights key issues charities should consider when hiring commercial fund-raisers, as well as other information to help donors and charities make prudent, informed decisions.